Sole trader Paying another Sole Trader

neil_themoog

Hi,

I have a very simple side hustle where we provide video production services.

Dont want the overhead of being a ltd.

Sometimes I need to get people in to assist with various duties, director, additional camera personel. They all operate as soletrader freelancers. 

Suppose I get paid £1000 and pay a director and camera man £300 each. How do I expense this? I tried using services in quickbooks, but doesn't seem to deduct the costs as I would expect?

Is this a legitimate way to operate?

Neil

DullGreyGuy

It would be a legitimate expense and so deductible from your revenues. 

May need to be a little careful around the insurance side (both yours and theirs) as you will have full liability to your client even though you are subcontracting part of the work out. Similarly there is a risk that they could trigger a need for your to have employers liability insurance, especially if they are labour only/arent bringing tools

neil_themoog

At the moment I pay a basic PL and PI insurance, we have been considering adding employers liability...would this work for covering subcontractors? 

neil_themoog

BTW thanks DullGreyGuy! What I need to figure out now is how to categorise it in quickbooks so that it recognises it...So any help from quick books people would be really usefull!

Undervalued

neil_themoog said:

At the moment I pay a basic PL and PI insurance, we have been considering adding employers liability...would this work for covering subcontractors? 

Yes, it normally would. Employee is quite a loose term for that purpose and normally includes self employed subcontractors and even volunteers.

penners324

What version of QB? Either create a bill then pay it or create an expense dated the day you paid the subcontractors 

DullGreyGuy

penners324 said:

What version of QB? Either create a bill then pay it or create an expense dated the day you paid the subcontractors 

If you are on cash accounting; if you are on accrual then its the date it became payable not the date it was paid